Welcome to another edition of "Michael explains historical economics". Dear god...
"Popularity isn't everything. In fact, it isn't the most important thing. What matters is doing what you believe to be right, and that's what I've always tried to do, and I shall go on doing."
Ted Heath, Panorama 16 October 1967
"Ted Heath had some of the best ideas of a post-war Prime Minister. He was quite a radical person."
David Owen, to Peter Hennessy, Hennessy, Peter. The Prime Minister: The Office and Its Holders Since 1945. United Kingdom: St. Martin's Publishing Group, 2001.
Have you ever known a Prime Minister who is bloody hard to rank? The man who brought the UK into the EU, yet also the man who, when the Sunningdale Agreement failed, brought internment to Northern Ireland. The man who orchestrated an arms embargo on all combatants in the Yom Kippur War, yet officially acknowledged Pinochet. The man who brought in the eligibility for free school meals yet ended free school milk in the same instance. He increased welfare spending, pensions and index linked benefits to inflation, yet imprisoned striking dockworkers.
What I’m trying to say is that Ted Heath, of all Prime Ministers, is the best and worst simultaneously. At his best, his government carried on the progressive legacy of post-war Britain, and at his worst, he created wounds and recriminations that scarred Britain for decades afterwards. For a man later known for his huffs, Heath was surprisingly loyal to his Cabinet, but this included loyalty to floundering men like Anthony Barber.
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Under Heath, the care allowance was introduced, as was the right to education for children with Downs Syndrome, and the demolition programme of the 1970s carried on full pace. In 1974 he went to China to meet with Mao Zedong. Sri Lanka and Fiji got their independence. The Humber Bridge was built. His government created the British Library.
However, his legacy was made in membership of the European Community. And his tenure ended with rising unemployment, strikes, and the Three Day Week. The historical judgement on Heath is still out, as the implications from all the twists and turns of his leadership are yet to fully work themselves out. Ask me in 50 years time, said Peter Hennessy in a recent book, where he viewed Ted Heath’s near four years in charge as flawed but promising.
It's probably telling that being near the top of the decent but flawed list is good enough for a top twenty placing.
"A tragic figure, he held all the major offices of power, but slipped just at the last hurdle to greatness, that of being elected in his own right as Prime Minister."
Bob McKenzie, 1979
We’re still in the 1970s and shifting from The Three Day Week to the Winter of Discontent! Everyone reading this knows the epitaph for Sunny Jim’s Premiership. That he didn’t go for an early election, suffered the worst Winter of strikes on record, and lost the subsequent election thereafter to Thatcher. That he said “Crisis? What crisis?” to the press (actually it was more nuanced than that but press and PR don’t do nuance.) That his eyes were focused solely on the economy, which he inherited in a perilous condition. That he went cap in hand to the IMF to bail out Britain. We know the headlines.
The economy was the focus, but as you’ve seen from Ted Heath above, the economy was fragile throughout the 1970s. This was partly down to mismanagement. In the 1960s, Harold Wilson came to power, only to realise the deficit was considerably worse than expected. (This all stemmed from Britain’s financial woes from being in World War Two, which ensured a massive debt we only finally paid off in 2006.) Wilson’s government tried deflation, tax raises, wage freezes and foreign investment to avoid going for devaluation, based on bad memories of Labour going for that in the 1940s. Anyhow, 1967 came, oil problems hit the world economy (not helped by the Six Day War), dock strikes hampered things, and the Americans refused another bail out of the British economy – more on that when we get to Wilson. So, devaluation happened. This caused the resignation of the British Chancellor, who was a man called Jim Callaghan.
In came Roy Jenkins as Chancellor, and in the space of 18 months he turned this disaster into an economic surplus, by heavily increasing taxation across the board, taking a loan from the International Monetary Fund, and boosting the export industry. However, he was seen as a cautious, careful Chancellor, even after this success, and certain Labour figures (Dennis Skinner) blamed him for not bribing the public enough in the 1970 election. Which Ted Heath won.
And then, Ted Heath’s chosen man to become the Chancellor, Iain McLeod went and died of a massive heart attack. McLeod was a man whose life was shaped by the unemployment he saw as a young man during the Great Depression. He would have been another in the line of similar Chancellors throughout the 1950s and 60s who saw themselves as opponents of unemployment. He had been the Shadow Chancellor, he had Heath’s confidence. He had Jenkins surplus to play with. Not that this mattered, he was dead.
It was time for a substitute Chancellor. It was time for Anthony Barber. Now, Ted Heath had a lot of time for Anthony Barber. He was originally to be the man to negotiate British entry into the EEC. As Chancellor, he felt he could be a liberal man, and his signature policy was the introduction of Value Added Tax, that great regressive tax which adds money to all of your groceries. He reduced taxes, the economy boomed and then… the bubble burst. Currency limitations were blamed. Trouble with oil prices due to yet more unrest in the Middle East was a considerable issue. Barber harked back to his dead predecessor by bringing in what McLeod had called in the past a “period of stagflation”. The boom led to heavy inflation and demands for higher workers' wages to keep up with the cost of living, and to deal with this he floated the pound on the international markets, only to see it immediately plunge in value.
This led to the run of events which brought in The Three Day Week, mentioned above, and it was good night, Ted and Tony.
And then into the picture came Denis Healey.
“When I was at university, we used to debate “Who would do the dirty jobs under socialism?” And when I grew up, I found out that would be Denis Healey.”
Denis Healey, BBC tribute (2015)
Now Denis Healey had a formidable reputation. His BBC tribute documentary, when the great man died in 2015, was subtitled The Best Prime Minister Labour Never Had. And it was his time as Chancellor which cemented that reputation as someone who would never be Prime Minister. (That, and his unwillingness to schmooze colleagues.) He announced before the 1974 election(s) that he would squeeze speculators “till the pips squeaked”, and when told he would scare the voters, told Labour MPs that they preached redistribution of wealth, but he aimed to carry it out! Healey took one look at the Barber Economy and raised taxes. When this failed to sort it out, he went back to the IMF and took out the loan he became synonymous with. After this, he focused on extreme wage control. The government also benefitted from exporting North Sea oil. By 1979, the economy was growing, but by then workers wanted rises above inflation barred by Healey’s wage controls. And if there was an error, it was agreeing a 1978 wage increase of 17% with Ford workers, because when you break your rules once…
With each marginalised sector having had enough of the wages and inflation costs, in came the Winter of Discontent, when seemingly everyone who could strike went on strike.
Now we’re back to Jim Callaghan’s fall, on the mantra of “it’s the economy stupid”, but hopefully this little diversion along 30 odd years helps explain that one man cannot undo several decades worth of stress on a single country’s economy, and that every policy under the sun had been tried out. Even so, at the end of the day, Britain is not an island, financially, and its economy was easily a victim to world events elsewhere, such as in the Middle East.
Everything returns to the UK needing its own renewable energy!
Callaghan’s push for devolution, forced by the need for support from the Liberals and SNP, failed as first the Tories blocked progress by smothering it with amendments. And then, in 1978, Labour backbench unionist George Cunningham forced through an amendment to the forthcoming Scottish devolution referendum, declaring that 40% of the public had to support devolution. (This was almost impossible under the old electoral rolls used for the referendum, a fact Cunningham knew.) This led to the situation where the Scots voted for devolution, but not by the numbers required to make it law, which led to the SNP voting with the Tories in the Vote of Confidence in 1979. (It also built future momentum so that when the question was asked again, in 1997, it passed resoundingly!)
In between all of this, what achievements did the Callaghan government gain, to keep them above water while all this economic tsunami was going on? Well, his government pushed the preservation of archaeological areas. They brought in mesothelioma compensation, and crofters rights to share in the value of their land. He brought in the Theatres Trust, and pushed through the independence of the Seychelles, Kiribati and the Solomon Islands.
But let’s look at Jim’s two greatest achievements, by far. The first was The Rent Act, in 1977. This protected renters from unfair rent rises, and protected them from homelessness, by legalising the right to remain after a tenancy had ended, until suitable other accommodation was found. The second was the introduction of domestic violence laws. This gave the police powers of arrest in domestic abuse cases and gave them the power to separate couples where abuse was evident or suspected, extending rights to victims.
Incidentally, there's an amusing story in Tony Benn's diaries, set during the 1997 election, when an elderly Callaghan was called by a Labour campaigner, unaware of who he was, asking if he'd ever considered getting involved with Labour. "I was Labour Prime Minister, does that count?"
A lifelong friend of Edmund Burke, Rockingham spent his life backing American colonial rights, and later independence. In office he repealed the Stamp Act, but he died before he could see American Independence become official. He also brought in the Relief of the Poor Act in 1782, which organised workhouses, but crucially, these were for the elderly and sick, a precursor of sort to the care home. The working poor got help while living in their own homes, which Rockingham saw as being less intrusive and more humane. It replaced the Workhouse Test, where anyone poor who wanted help had to go to the workhouses and do labour for their service. As such, he was massively ahead of his own time.
The first Prime Minister I remember, John Major won an election and then got heavily gubbed in a second. In between, the economy went into crisis and then levelled, the Back to Basics campaign was an utter disaster as scandalous Tories kept falling into the headlines, and for the first time in a long time there was actual progress on Northern Ireland. Major didn’t have much of a honeymoon replacing Margaret Thatcher, as he was thrown into the midst of the Gulf War coalition. However, John Major was to prove a tougher nut to crack than his opponents (in and out of the government) had assumed, and by the end of his tenure, his public approval ran considerably higher than his government.
Major’s government struggled from the moment Black Wednesday happened. The European Exchange Rate Mechanism (ERM) was founded in 1979, as a way of avoiding currency fluctuating by linking European currencies to the same exchange rate. Britain didn’t join at the time but did follow it during Nigel Lawson’s time as Chancellor, and signed up to the ERM in 1990, shortly before Thatcher’s resignation. It was John Major who heavily pushed for the UK to join. Unfortunately, they entered the ERM with high inflation, which meant the pound depreciated (the exchange rate fell). Major didn’t want to devalue, seeing Wilson’s issues 30 years earlier, and so, on the 16 September 1992, currency speculators used the growing issue to short sell pounds, leaving the Bank of England unable to deal with the speed of sales on the market, which led the pound to sink below the ERM exchange rate minimum, which led to the beleaguered Chancellor Norman Lamont pushing up interest rates four times in one day before giving up and removing the UK from the ERM. Lamont was fired after singing Edith Piaf in the bath, John Major’s economic credibility was shattered, and worst of all, Norman Tebbit was able to look smug and say he’d told them so.
The only person to enjoy Black Wednesday was possibly George Soros, whose currency speculating in advance put him in a position to make a billion dollars in profit from the Bank of England’s woes.
The ERM has since been replaced by the Euro, and the UK never joined that either. The financial crisis of 2008 (onwards) proved that a joint currency can still struggle if member states collapse, as with Greece. But the decision to go into the ERM too quickly and then retreat built the anti-European movement, and from there came Brexit.
European continued to be an issue during Major’s government, with the Maastricht Rebels who opposed the formation of the European Union (from the old EEC), being loud and obstructive to the government. We can’t blame the many, many sleaze scandals on Major – after all, his own affair wasn’t revealed until this century! We can however put the privatisation of the railways on his watch, which continues to be a problem for successive governments.
Yet, John Major could also be a decisive influence. In the wake of Dunblane, that awful massacre of children, Major’s government brought in the widespread ban on handgun ownership. Despite privatising the main railways, he brought in funding to protect the growing railway preservation heritage movement. There was the Dangerous Dogs Act (though it should have been a Dangerous Dog Owners Act, if you ask me), and the creation of the National Lottery. Even if I have played that on and off since adulthood and not even won a tenner. Bloody Major…
Internationally, there was the opening of the Channel Tunnel, and controls on the use and stocking of chemical weapons. The Antarctic Act also signed up the UK to international treaties on preserving that continent, with special provisions for the preservation of marine life, and punishment for British citizens who broke conservation laws.
Elsewhere, zoos were made part of the National Heritage, badgers were given protected status, civil marriages were introduced, and the major galleries and museums now had boards of trustees. Jobseekers Allowance was introduced to streamline unemployment benefits. Deer were at that point given protection, as was the Welsh Language. One of those is intermittent depending on species numbers.
John Major’s other achievement is one for the working-class sports fan. In November, when we enjoy the World Cup (yes, Qatar, I know) live on the BBC and ITV, in the comfort of our living rooms, the man to thank is John Major. His government introduced the “crown jewels of sport” list, those sporting occasions seen as so important to the national culture that they cannot be shown on pay TV. They must be available on a free (yes, TV licence, I know) channel. The A list consists of the World Cup, the Euros, the FA Cup final, the Scottish Cup final, the Derby, the Grand National, the Rugby World Cup final, Wimbledon and the Olympics and Paralympics. (Though I found the vast majority of the latter two was on a pay per use channel in 2021 but we can’t blame Major for that change. He had his beloved England cricket team under this too, only for English cricket to negotiate themselves off the list so they could make more TV money!)
All of this is birdfeed to the reason he makes the top 20 though, which is his sterling work towards peace in Northern Ireland. He missed the Good Friday Agreement, but many of the steps towards that achievement, from the British side, worked because they were built on Major’s achievements. The Downing Street Declaration in 1993 stated that the issues between North and South in Ireland could be solved only by the people of Ireland. The government had been in talks with the IRA while John Hume’s talks with Gerry Adams were ongoing. Through friendships with Ireland, Major realised that talks were thawing the situation in Northern Ireland too. He talked to Sinn Fein as well as the unionists and built on the grounds for future peace. (There was an IRA ceasefire in 1994, but mainland Britain bombing had continued by 1996.) After the antagonistic Thatcher/Haughey negotiations, it was vital that a conciliatory talker bridged the gap between that and the eventual Good Friday Agreement. That was John Major’s role, and its what history will remember him for. As a fundamentally decent sort who did the right thing when history demanded it.
And possibly as a man with terrible taste in mistresses, but that is beside the point!
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